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Billabong shareholders vote in favor of major share transfer

Industry Updates

Billabong to tranfer more than 40% to private equity groups

Surfersvillage Global Surf News, 31 January, 2014 -- Billabong shareholders have voted overwhelmingly in favour of a US$135m share issue that will transfer more than 40% of the business to two US private equity groups.

At an extraordinary general meeting yesterday (30 January), shareholders approved the issue of 329m shares, at AUD$0.41 per share, to Oaktree Capital and Centerbridge Partners. The resolution follows an 18-month auction for the company.

Billabong chairman Ian Pollard told shareholders at the meeting that the share issue and a subsequent rights issue give the company "breathing space" and allow it to materially lower its gearing, reduce its financial risk and improve its profitability and free cash flow.

This, he said, will allow the board and management to focus on stabilising and then re-building the business rather than "dealing continuously with ownership and financing issues".

He added: "We still face a number of hurdles in our reported profitability and expect this year's results to include more significant costs associated with reinvesting in and restructuring the business.

"But support of today's resolutions is critical in providing our new executive leadership team with the financial flexibility to turn around our business operations."

Earlier this week, the Australian Shareholders Association expressed its concern that "control of an iconic Australian company is changing hands cheaply without shareholders being given up-to-date financial information".

However, an independent expert's report from Grant Samuel said it was in the best interests of shareholders to approve the share issue as the company had no alternative source of funds and the balance sheet restructure would allow management to focus on improving performance.